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CBSE NOTES ⇒ Class 11th ⇒ Accounts ⇒ 1. Introduction to Accounting

1. Introduction to Accounting

Introduction


Defintion: 

"Accounting is the process of collecting, recording, summarising and comunicating financial information." 

Attributes of Accounting:

1. Accounting is an art as well as a Science: 

2. Accounting Records only those events and transactions which are of financial character: 

3. Accounting records transactions by expressing them in term of money:

4. Functions of accounting: 

5. Service activity: 

Accounting Process: 

Accounting process are as follows:

(i)    Financial Transactions or Events,

(ii)   Recording,

(iii)  Classifying,

(iv)  Summarising

(v)   Analysis

(vi)  Interpretaion

(vii) Reporting or Communicating 

Branches of Accounting : 

(i)   Financial Accounting : Financial Accounting is concerned with recording financial transactions, summarising and interpreting them and communicating the results to users. 

  • It is concerned with recording of business transaction Periodic preparation of balance sheet profit & loss A/C .
  • Financial accounting is useful to determine correct profit or lose made during the year and financial position at the end of the year.

(ii)  Cost Accounting: The limitation of financial accounting in respect of information relating to the cost of products or services led to the development of a specialised branch, i.e Cost Accounting. 

  • . It helps to determine cost of product and cost control.

(iii)  Management Accounting: Management Accounting is the most recently developed branch of accounting. It is concerned with generating accounting information relating to funds, costs profits, etc. as it enables the management in decision making. 

  • It helps the management in decision making, future planning, increasing efficiency and maximizing profit.
  • It is highly developed branch of accounting.

Book Keeping: Book keeping is a branch of knowledge that educates us as to how financial records are to be maintained. Book keeping is a part of accounting and is concerned with the recording of financial data in the book of accounts. 

"Book keeping is an art of recording bussiness dealing in a set of books."                 --- J. R. Batliboi

"Book keeping is an art of recording bussiness transactions in a systemic manner."      --A. N. Rosen Kampff

Book keeping is a part of accounting.

 

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